FTX’s files lawsuit against Binance to recover $1.8 billion

Even after its collapse, the ghost of FTX haunts the crypto world, with its estate launching new lawsuits to recover billions in lost funds.

Binance and its former CEO Changpeng Zhao, known as "CZ," are the latest targets, facing allegations of receiving $1.76 billion in funds that FTX claims were fraudulently transferred.

Filed on behalf of FTX’s estate, the suit accuses Binance of siphoning funds through a deal in July 2021, when FTX co-founder Sam Bankman-Fried allegedly repurchased shares in FTX's international and U.S. entities using FTX and Binance-branded cryptocurrencies.

The transaction, which saw Binance sell back its 20% stake in FTX’s international unit and 18.4% in its U.S. division, is now described by the FTX estate as unlawful, arguing that FTX and Alameda Research were insolvent at the time.

The lawsuit also directly accuses Zhao of working to bring down FTX, pointing to a tweet he posted on November 6, 2022, announcing Binance’s plan to liquidate $529 million in FTX tokens. The FTX estate claims this "triggered a predictable wave of withdrawals" contributed to its collapse and exposed FTX’s financial instability.

US SEC charges ex-FTX boss Sam Bankman-Fried with defrauding investors

Following FTX’s fall from grace, the giant crypto exchange company and its ex-CEO Sam Bankman-Fried has been charged by the US Securities and Exchange Commission with defrauding customers of $1.8 billion, a day after the crypto tycoon was arrested in the Bahamas at the request of the United States

TechloyEmmanuel Oyedeji

FTX’s collapse led to criminal charges against Bankman-Fried, convicted of misusing billions in customer deposits for personal gain. The SEC concluded that FTX’s downfall was due to Bankman-Fried’s–now serving a 25-year sentence for fraud–misappropriation of funds, shaking the crypto world and leaving creditors in the lurch.

Crypto exchange company FTX files for bankruptcy

FTX, one of the largest crypto exchanges in the world, founded by Sam Bankman-Fried and previously valued at $32 billion has now filed for bankruptcy amidst a massive liquidity crunch. This came after FTX’s sister company Alameda Research’s balance sheet showed an alarming amount of FTT (FTX’s native token) in

TechloyEmmanuel Oyedeji

The Binance lawsuit is one of over 20 actions the FTX estate has launched to reclaim billions. Other cases include Alameda Research’s lawsuit against Waves blockchain founder Aleksandr Ivanov to recoup $90 million allegedly deposited in a Waves-based liquidity platform. Last month, FTX's estate received court approval for a $16 billion repayment plan for customers affected by the collapse.

This lawsuit adds another chapter to the bitter saga between Binance and FTX, two giants once on the brink of partnership. When FTX faltered in November 2022, Binance initially offered to buy its non-U.S. assets but quickly backed out, leaving FTX to collapse.

This lawsuit further adds to the mounting legal troubles Binance has faced globally over the past year. The company has been embroiled in major legal tussles with regulators in the U.S., India, Nigeria, and Brazil, particularly around compliance and anti-money laundering issues. Binance was also forced to exit the Dutch and German markets after failing to secure adequate licensing to operate fully in those jurisdictions. FTX’s estate now joining the list of litigants, further adds to the ongoing scrutiny against crypto’s largest player.

With Zhao himself sentenced to four months in prison this year for anti-money laundering violations, the overall crypto industry faces intense scrutiny. As FTX’s estate seeks to reclaim funds, the spotlight remains on the volatile and high-stakes crypto world, where past actions continue to shape the future.